KAI selected as PBL provider for Philippine FA-50

Korea Aerospace Industries Ltd. (KAI), the country's sole military aircraft manufacturer, said on Friday that it was selected as the performance-based logistics (PBL) provider for the FA-50PH fighter jets operated by the Philippine Air Force.

PBL is a system where payment is based on performance in maintenance, repair, and overhaul (MRO) services, with bonuses or penalties applied depending on the results.

The contract value for one year is about 27 billion won ($20 million), and KAI plans to secure additional contracts by demonstrating its performance.

The FA-50PH is a variant of the FA-50, a domestically produced multi-role fighter, customized to meet the needs of the Philippines, and has been exported to the country since 2014.

This marks the first time a South Korean company has taken on a long-term MRO contract for exported aircraft. Previously, support for exported aircraft was provided on a one-time basis whenever repair needs arose.

KAI expects to pave the way for overseas MRO business to become a new revenue stream. The company explained that fighter jets are typically operated for over 30 years, with follow-up support costs ranging from two to five times the purchase price.

KAI also plans to pursue PBL contracts with other countries where the T-50 series aircraft have been exported.

In addition to fighter jets, the first overseas MRO contract in the naval sector was also secured in the Philippines. HD Hyundai Heavy Industries Co. won an MRO contract in 2022 for the 2,600-ton frigates it had exported to the country.

Write to Dong-Hyun Kim at 3code@hankyung.com